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On Our Radar

Yahoo Slumps as 4Q Display Sales Fail to Impress

Yahoo (YHOO) beat the Street on Tuesday by posting a 28% jump in fourth-quarter earnings, but the Internet giant continued to struggle with search and display prices.

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Shares of Yahoo retreated as much as 5% in extended trading despite the bottom-line beat as investors worry about ad sales and new details on Alibaba Group.

Yahoo said it earned $348 million, or 33 cents a share, last quarter, compared with a profit of $272 million, or 23 cents a share, a year earlier. The recent quarter included a $49 million net gain tied to the sale of patents.

"I'm encouraged by Yahoo's performance in Q4 and 2013 overall. We saw continued stability in the business, and our investments allowed us to bring beautiful products to our users and establish a strong foundation for revenue growth," Yahoo CEO Marissa Mayer said in a statement.

Investors were also digesting the latest financial metrics on Alibaba Group, the Chinese e-commerce giant that is 24% owned by Yahoo.

According to slides released on Yahoo’s website, the company earned $222 million in the fourth quarter from its stakes in Alibaba and Yahoo Japan. That’s down from $233 million in the third quarter of 2013, but well above the $149 million it earned in the fourth quarter of 2012.

Alibaba is set to go public later this year and accounts for a large chunk of Yahoo's overall market value.

Yahoo said it repurchased six million shares last quarter for $231 million and used a net $60 million for acquisitions.

Shares of Sunnyvale, Calif.-based Yahoo slumped 3.36% to $36.90 in extended trading Tuesday afternoon. Yahoo shares rallied 4.28% to $38.22 during regular trading, leaving them up almost 88% over the past 12 months.